Exploring the Untapped Promise of Multichannel

By Jamus Driscoll

For the past decade or so, we';ve been talking about the promise and the potential of multichannel retailing (and talking, and talking) but in that time, we';ve made surprisingly little headway toward fulfilling this promise. What makes this particularly curious is that unlike other past retail "vision state" exercises, where the goals have changed with the prevailing breeze, this time the target hasn';t budged an inch though the years of our pursuit. The vision--now, as then--has been to deliver a consistently branded shopping experience regardless of the point of transaction, and in so doing exceed (or at a minimum, meet) consumer expectations for uniform service. Doing so would foster customer loyalty and brand affinity, and in turn be rewarded with a larger share of wallet. It';s always been a solid vision, but the trouble is, that';s just where it';s remained--a vision, forever on the horizon.

Why? In the years since we first identified this as a goal, has it not been proven time and again that this would be both appreciated by the customer and profitable to the retailer? Have we not seen the data confirming that a cross-channel shopper spends three times more than one who shops via a single channel? Or that up to 40 percent of in-store purchases are influenced by the web?

Of course we have. And motivated by that opportunity, the industry has tackled many of the perceived challenges to integrating channels. New organizational models have been created to reward collaboration across a retailer';s various operating units. Progressive retailers are providing store clerks with incentives to send customers to the web and, in turn, the web teams are compensated in part on transactions in the store. The IT professionals have taken on the yeomen tasks of overhauling store inventory systems and distributed order management applications and integrating them with the e-commerce channel.

The little progress that has, in fact, been made has been rewarded handsomely. Witness the emphasis Circuit City places behind its "24/24 Pickup Guarantee" in its 2008 Annual Report:
As an enhancement of its multichannel capabilities, Circuit City offers a 24/24 Pickup Guarantee for qualifying purchases made through its website or telephone call centers. Under this policy, qualifying purchases will be ready for customers to pick up at their designated store within 24 minutes of purchase confirmation, or the customer will receive a $24 Circuit City gift card. During fiscal 2008, approximately 55 percent of online sales were picked up in a store.

In other words, Circuit City has turned the mundane act of fulfillment for over half of its consumer-direct orders into a traffic driver for its stores, where consumers have ample opportunity and motivation to round out their online purchase with baskets full of accessories and impulse purchases. That';s transformative retail that leverages the power of the multichannel promise!

THE NEXT EVOLUTION
Certainly, the industry still has a long road ahead to institutionalize across the board the best practices and operational models its early pioneers have created for the mechanics of conducting transactions across channels. But without minimizing the effort ahead to get there en masse, let';s assume that with early blueprints now in place, we will get there in due course. The question becomes, then what? Just because we now have an ability to share transactions across the channels, does that mean necessarily that we';ve also laid the groundwork for the brand to deliver a uniform experience?

Not likely. With transactional fluidity across the channels comes the next challenges of cross-channel retail: consistency, richness and accuracy of all things product. Think of it as merchandising integrity, at the product level, where the fidelity of product pricing and promotions must be maintained across transaction mediums, and delivered to a new, socially wired consumer with a voracious appetite for multi-media product content. Sounds easy, right?

In time, this challenge will require new operational processes and infrastructure for managing cross-channel merchandising. Let';s look at some of these requirements:

Consistent, rich product content  Increasingly, consumers will require that product content is richer and more consistent, regardless of the touchpoint. With the recent arrival of full-browser mobile smartphones and the incredible depth of product content available on most e-commerce sites, consumers will have at their fingertips a rich trove of product content at every point of purchase. Complementary information will enhance the shopping experience; inconsistencies will become readily apparent.

Promotion Fidelity - Promotions, one of the most difficult processes to manage with consistency across channels, will play a greater role in tomorrow';s retail. As the volume and variety of promotions increase, this challenge will also increase--particularly as the channels blend. Retailers will require capabilities to orchestrate and police channel-specific promotions in a cross-channel environment.

Price Consistency - With the release of Amazon';s new TextBuyIt service, which enables consumers to comparison shop anywhere, anytime, Amazon has delivered ultimate price transparency. Retailers, at a bare minimum, will be required to do the same across their own channels and adjust quickly and consistently across those channels as market forces dictate.

Cross-sells and Up-sells - The e-commerce channel has long been a driver, and shown the value of, product cross-sells and up-sells, either via merchant directive or by automation. As the channels merge, the opportunity to extend these practices brand-wide can';t be ignored.

IS E-COMMERCE THE ANSWER?
Interestingly, many of the challenges of tomorrow';s cross-channel merchandising requirements are being met today within e-commerce platforms. There, product content is at its richest, since it';s required that content be romanced with long and short descriptions, searchable product attributes, rich imaging and other content assets created to make the e-commerce channel whir. And it';s all available in a repository of digitized assets, which can be leveraged into channels like mobile, contact centers, kiosks and other point-of-sale terminals. E-commerce merchants have invested in modeling and optimizing the promotions and cross-sells used to drive profitability, and those processes could be extended to the other touchpoints, as well. And significant investment has gone into the engines used to manage myriad promotions and the transactional governance to ensure promotions are not applied outside of their intended usage.

Some of the other requirements of cross-channel merchandising, like price consistency, place a premium on systems being able to easily share information. And it';s here where the latest e-commerce platforms shine. Built with open architectures, these systems are ready-made to publish and consume information from nearly any system. For issues like price management, which prizes synchronization across channels, the e-commerce platform can act as a recipient for price actions instigated elsewhere (like a price-optimization system), a syndication hub (a distribution mechanism for price changes made in an upstream system) or as the system of record itself.

The capabilities to meet tomorrow';s challenges are in place today.

Jamus Driscoll is vice president, marketing of Demandware, Inc., a Woburn, Mass.-based e-commerce solutions provider. He can be reached at jdriscoll@demandware.com.